Thirteen years ago this week, world leaders gathered in Monterrey, Mexico to identify new and sustainable sources of funding for global poverty eradication. President George W. Bush stunned the conference by pledging a $5 billion annual increase in U.S. aid levels for “projects in nations that govern justly, invest in their people and encourage economic freedom.” While the money never fully materialized, the Millennium Challenge Corporation was created and now stands as a shining example of innovative, transparent and effective aid that brings developing countries in as full and accountable partners.
{mosads}This July, the drama could be repeated at the third International Conference on Financing for Development in Addis Ababa, Ethiopia. The question is, will President Obama have an equally bold and far-reaching plan to announce?
The issue is an important one, because in September the United Nations will likely endorse a new set of Sustainable Development Goals to “end poverty, transform all lives, and protect the planet” by 2030. Among the 17 broad and ambitious goals are ending hunger, ensuring healthy lives, achieving gender equality and providing access to justice for all.
It’s an ambitious agenda, and realizing it won’t be easy or cheap. If the goals are to be taken seriously, we’ll need to come up with significant additional development resources. But the extra money can’t and shouldn’t all come from foreign aid. Low-income countries already finance the majority of their own development, and will need to expand trade, attract foreign investment, build public-private partnerships and put tax revenues, remittances and domestic savings to good use.
There are a number of steps we can take to support them at minimal cost to our own budget.
First, we can help developing countries do a better job of collecting taxes and spending them responsibly. Just a small amount of training and technology can reap enormous rewards; for instance, a $6 million U.S. Agency for International Development (USAID) investment in modernizing El Salvador’s tax administration led to a $350 million increase in annual revenues and a $160 million annual increase in social spending.
Yet congressional earmarks and directives make it virtually impossible for USAID to use existing funds for this purpose, and only a tiny amount is allotted to the Treasury Department for similar purposes. President Obama could establish an inter-agency initiative to provide technical assistance to governments to improve the integrity and efficiency of revenue collection while creating transparent and accountable government procurement agencies that ensure the new taxes are devoted to the public good.
Second, we can begin stanching the illicit flow of money out of developing countries, which has reached almost $1 trillion a year and made Africa a net creditor to the rest of the world. To do this, we must stop giving legal protection to corrupt foreign officials and criminal networks that steal natural resources and drain government coffers. By allowing anonymous companies to open bank accounts and conduct business in the United States, we provide a veil of secrecy that enables tax evaders and money launderers to enjoy their ill-gotten gains.
Obama could commit to establishing a national, public register of company ownership, such as the one being created in the United Kingdom, building on the recommendations of the Financial Action Task Force and the then-G-8 (now G-7).
Finally, we can set our sights beyond budget transparency and begin embracing publication of government contracts, at home and abroad. Public procurements, which total about $9.5 trillion a year, are the Achilles heel of government: Done right, they enable governments to serve their people, but all too often they are susceptible to bribery, kickbacks, embezzlement and other forms of abuse. A working group examining contract transparency concluded that commercial, privacy and national security concerns “can be addressed without undue burden.”
Obama could pledge to publish all contracts issued with U.S. taxpayer money and to support technology and systems that would allow developing countries to do the same. He should also help civil society organizations understand and use this information effectively.
President Obama, the ball is in your court. Congress ought to signal that when it comes to reducing global poverty and corruption, we’re all on the same team.
Ohlbaum is an independent consultant, co-chair of the Accountability Working Group of the Modernizing Foreign Assistance Network and a principal of Turner4D, a strategic communications firm.